Companies around the world are increasingly choosing to use carbon credit schemes to offset their emissions as governments urge them to decarbonize their operations. While this may seem the obvious solution for hard-to-abate industries, many fail to monitor and assess the schemes to ensure they are working as expected and offsetting the necessary amount of carbon to decarbonise operations.
Carbon offset programs are programs introduced by a wide range of companies that aim to reduce carbon emissions through various projects, rather than reducing emissions at the source. They are often used by companies in hard-to-fight industries such as aviation and manufacturing. Some of these programs include reforestation to absorb CO2 from the atmosphere, regenerative agriculture and renewable energy projects. In recent years, reports of the failure of carbon offset programs have increasingly emerged around the world, largely due to a lack of monitoring and evaluation.
A white paper from environmental firm Compensate showed that 90 percent of carbon offset projects they reviewed used nature-based solutions did not meet their sustainability criteria. Worryingly, many of these programs were certified to international Verra or Gold Standard standards. This view of the widespread failure of carbon offset programs has been echoed by former Bank of England Governor Mark Carney’s ‘Taskforce on Scaling Voluntary Carbon Markets’.
Some of the identified reasons for failure include the fact that emissions reductions depend on vague predictions; carbon credits can cause community conflict; there are unreliable baseline emissions figures that inflate emissions promises; many plans create risks for new forests once they are completed and the developers leave; and that many of these projects do not contribute to achieving additional climate benefits beyond CO2 compensation.
The low success rate of many carbon offset programs around the world means that some companies have overestimated the effectiveness of their offset activities. A study from the University of Berkeley’s Goldman School of Public Policy that evaluated the methods used in offset forestry projects – which account for 11 percent of all carbon offsets ever issued – found significant shortcomings, which resulted in the issuance of fake carbon credits. .
Many companies conduct forestry operations to offset their carbon emissions, invest in reducing the environmental impacts of logging infrastructure such as roads, wait until trees are older before harvesting them, or limit the number of trees that can be cut per hectare. However, the researchers found that many project developers generated credits even when no changes were made. The carbon offset market is largely unregulated, meaning compliance with standards is monitored by a few independent groups. The researchers assessed the approaches that some of the world’s largest registries – Verra’s Verified Carbon Standard, Winrock International’s American Carbon Registry and the Climate Action Reserve – use to provide carbon credits. The team discovered that the methods used did not meet the basic criteria that would guarantee projects make a real difference to the carbon dioxide level in the atmosphere. The project’s principal investigator, Barbara Haya, explained“It makes the global community think that we are doing more than we are actually doing in this brief moment: we must dramatically reduce our emissions to prevent runaway climate change.” She added: “Offsetting is a misnomer – you can’t ‘offset’ your emissions… We need alternative ways to support climate change because the current offset market is absolutely not working.”
A similar discovery was made in Australia by a group of eleven researchers. They discovered that the popular technique of ‘man-made regeneration’ failed to achieve the expected new tree cover in the outback forests between 2015 and 2022 study assessed 182 projects in arid and semi-desert areas and found that forest cover had barely grown or declined in almost 80 percent of cases. This suggests that the projects in question did not reduce emissions as promised by the companies using these offset schemes, and therefore these companies did not reduce their climate impact. By June 2023, more than 37 million carbon credits had been issued, worth between $750 million and $1 billion, each promising to remove a ton of carbon dioxide from the atmosphere. One of the authors, Andrew Macintosh, previously stated that these carbon offset programs were a “sham” and a fraud for taxpayers and the environment.
While thousands of companies around the world continue to use carbon offset programs to support efforts towards a low-carbon economy in line with a green transition, little is being done to ensure that offset projects deliver the expected results. Many companies are exaggerating their decarbonization performance, and little is being done to stop this, due to a lack of regulation in the sector. While more and more studies show that these types of projects are failing to reduce carbon emissions, there is no change in the way carbon offset programs are managed to ensure that companies actually decarbonize.
By Felicity Bradstock for Oilprice.com
